Staying Sane in the Chaos of Tax Changes

In the last three years, we have gone through several significant revisions to the tax law: the Tax Cuts and Jobs Act (TCJA), the Families First Coronavirus Response Act (FFCRA), the CARES (Coronavirus Aid, Relief, and Economic Security) Act, the Consolidated Appropriations Act, 2021, and a host of other smaller pieces of legislation that dealt with tax extenders or other tax-related issues.

Congress made some of these changes permanent, and some temporary. Sometimes Congress made retroactive revisions to temporary provisions. It is enough to drive one mad, at times. And now, with Democratic control of Congress and the Presidency, it is quite possible that there will be more tax changes coming sometime this year.

We best serve our clients by embracing these changes, correctly preparing tax returns to the best of our knowledge at the time we submit them, and making proactive recommendations to reduce their overall tax burden based on the law as written.

Here are three ways you can adapt to a rapidly changing tax world:

Quality education. As enrolled agents, we need to get at least 72 hours of continuing education over our three-year enrollment cycle. All education is not the same – there is quality education, and there is not quality education. The former prepares you well for tax law changes, the former does not. Always seek out the best education possible, even if it is at a higher cost than the other options. Even though our licensure requirements do not require us to get annual tax update education, I strongly recommend at least six hours in December or January each year.

Consult with peers. One of the important benefits of NAEA membership is being a part of a larger community when many of us work in individual or small tax practices. Our collective wisdom can solve pretty much any tax issue or question. Talk about tax issues in an online forum, in a social media group, or give someone a call. However, realize that you are ultimately responsible for the positions taken on tax returns, so always verify the advice you receive. Facebook is not tax authority!

Review prior filed returns. When we prepare 2020 tax returns, we need to review 2020 payroll tax returns as well as 2018 and 2019 tax returns for mistakes and
opportunities to take advantage of tax benefits we missed at the time of original filing or that Congress made available retroactively. This type of review differentiates
us from merely preparing the current year tax return to being a trusted tax advisor. And do not forget – if you made an error, you made an error. Own it and advise your client of the need to amend the tax return. Do not let the client lose out due to pride.

In closing, I continue to challenge you to contribute to your profession by writing content for EA Journal. If you have an article idea, contact me by email to discuss it. I am here to help you.